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Holiday Season Quickly Approaching: Use Tax Due on Online Purchases

For Immediate Release: Friday, November 25, 2016
Contact: Jonathan Harms, Communications Director, 605-773-3311

Holiday Season Quickly Approaching: Use Tax Due on Online Purchases

PIERRE, S.D. – The South Dakota Department of Revenue wants to remind South Dakotans that state and municipal tax may be due on purchases made online.

“Many consumers do not realize that most internet retailers are not collecting sales tax on online sales, so use tax would be due,” Doug Schinkel, director of the Business Tax division stated. “Cyber Monday is a good time to remind citizens that tax paid on internet purchases goes toward schools, law enforcement and fire services. If an individual buys something online and is not charged sales tax on the item, it’s up to the purchaser to pay use tax.”

An individual owes use tax if they did not pay sales tax when purchasing the items or if the sales tax they paid to another state was lower than what they would have paid in South Dakota (the difference in the two amounts is how much use tax is owed). Each year according to the South Dakota Bureau of Finance and Management, it is estimated nearly $50 million to $55 million in use tax goes unreported in South Dakota.

South Dakota’s use tax rate is 4.5 percent, the same as the state’s sales tax rate. Municipal tax may also be due based on where the goods are delivered. Schinkel says shoppers can find use tax reporting forms and other information on South Dakota’s use tax on the Department of Revenue website at http://sd.gov/Usetax.

For more information about use tax, visit the Department of Revenue’s website or call the toll-free helpline at 800-829-9188.  You may also visit a local Department of Revenue office located in Aberdeen, Mitchell, Pierre, Rapid City, Sioux Falls, Watertown and Yankton.